Alex Epstein on why reopening the Strait of Hormuz is the only real solution — and why the US is sleeping on Canada

Summary

Alex Epstein — founder of the Center for Industrial Progress and author of Fossil Future — argues that no combination of alternatives comes close to replacing the roughly 20 million barrels a day that move through the Strait of Hormuz. That volume exceeds total US oil production. Every other option on the table, from Saudi spare capacity to strategic reserves to alternative routes, operates in the low single-digit millions at best.

The Hormuz problem

Reopening the strait is harder than it sounds. Iran operates truck-launched Shahid suicide drones with roughly 500 miles of range that are far cheaper to deploy than to intercept. Engaging them with Patriot missile batteries costs around $3 million per intercept against a $30,000 drone, which is not a sustainable posture.

Epstein's preferred path combines two moves. A credible military threat must make Iran understand that attacking shipping carries severe consequences, a calculation that may carry more weight after recent Iranian leadership losses. In parallel, a US-led convoy system with allied participation, potentially including Japan, South Korea, India, and China, which depends heavily on Hormuz flows and has been building reserves, would provide practical cover for commercial shipping. Government-backed shipping insurance, floated by the administration, is a supporting mechanism but would likely require congressional funding beyond what the existing development corporation can provide.

Emergency and spare capacity

Saudi Arabia and the UAE hold an estimated 1 to 3 million barrels per day of spare capacity that could come online at relatively low cost under OPEC+ arrangements. Combined with coordinated IEA strategic reserve releases, which draw on roughly 1.4 billion barrels held across member countries, a coordinated response might unlock 6 million barrels per day. Epstein puts 10 million a day at the outer edge of what is realistic.

The US Strategic Petroleum Reserve holds around 400 million barrels with a maximum release rate of roughly 4 million barrels per day. Epstein argues it should hold over 700 million. The Biden administration drew it down to suppress gasoline prices ahead of midterm elections and did so in ways that degraded the facilities. Not refilling it when oil was trading at $50 to $60 a barrel is, in his view, a straightforward policy failure.

Two ideas Epstein rejects

Banning US crude exports sounds intuitive but conflicts with refinery infrastructure. US refineries were built for heavier crude grades before the shale era, while shale production yields lighter crude. A ban would strand light crude that cannot be efficiently processed domestically while doing nothing to solve the heavier-grade shortage. It would also destroy the price signal needed to incentivize production increases.

Selling near-term oil futures to suppress the spot price while buying long-dated contracts gets similarly dismissed. Distorting price signals reduces the incentive to unlock new supply at precisely the moment more supply is needed.

Venezuela is essentially a non-option. Current production is below 1 million barrels per day, and no realistic near-term increase is available regardless of policy changes.

Canada

Epstein's most pointed argument is about what the US is ignoring. Canada holds more oil reserves than the US but produces roughly a third as much, partly due to its own poor policy and partly due to US decisions including the cancellation of the Keystone XL pipeline. Canadian oil sands produce the heavy crude that US Gulf Coast refineries are specifically configured to process.

With Keystone gone, rail is the available option. Canadian rail oil transport capacity is currently underutilized. Epstein believes a targeted US-Canada initiative could add a few hundred thousand barrels per day in the near term, modest against the Hormuz gap but real, fast, and requiring no new infrastructure beyond logistics coordination. He also notes that Canada holds what he describes as some of the world's best uranium deposits, adding a longer-term dimension to the relationship. His frustration is that the administration has fixated on Venezuela while ignoring a friendly, stable, resource-rich, geographically adjacent partner.

Jones Act

Suspending the Jones Act, which restricts US coastal shipping to American-owned and American-crewed vessels, would immediately improve the efficiency of domestic oil transport. The effect is most relevant for California, which has no pipeline connections and depends on maritime supply. Epstein supports permanent repeal rather than a crisis waiver, noting that decades of Jones Act protection have not produced a competitive US shipbuilding industry.

Priority order

Epstein's full priority stack runs from reopening the Strait of Hormuz, to activating Saudi and UAE spare capacity, to coordinating IEA and SPR releases, to suspending the Jones Act, to ramping Canadian rail imports, to encouraging incremental US production. Everything below the first item is a stopgap. If the strait stays closed for an extended period, the economic damage is severe. Oil's combination of energy density and portability makes it irreplaceable for transport and trade at any near-term horizon, and no substitution path works at the required scale.